P 13-1 Bank loan; accrued interest CLO13-2 Blanton Plastics, a household plastic product manufacturer, borrowed $ 14 million cash on October 1, 2021, to provide working capital for year-end production. Blanton issued a four- month, 12% promissory note to L&T Bank under a prearranged short-term line of credit. Interest on the note was payable at maturity. Each firm's fiscal period is the calendar year. Required: 1. Prepare the journal entries to record (a) the issuance of the note by Blanton Plastics and (b) L&T Bank's receivable on October 1, 2021. 2. Prepare the journal entries by both firms to record all subsequent events related to the note through January 31, 2022. 3. Suppose the face amount of the note was adjusted to include interest (a noninterest-bearing note) and 12% is the bank's stated discount rate. (a) Prepare the journal entries to record the issuance of the noninterest-bearing note by Blanton Plastics on October 1, 2021, the adjusting entry at December 31, and payment of the note at maturity. (b) What would be the effective interest rate? General Journal Debit Credit 14,000,000 Account Blanton Plastics Cash Notes payable L&T Bank Notes receivable Cash 14.000.000 *Correct! 14,000,000 14,000,000 *Correct! Adjusting Entries (December 31, 2021) 420.000 420.000 - Correct Blanton Plastics Interest expense Interest payable L&T Bank Interest receivable Interest revenue 140,000 420,000 - Correct! Maturity (January 31, 2022) 140,000 420.000 14,000,000 14,560,000 - Correct! Blanton Plastics Interest expense Interest payable Notes payable Cash L&T Bank Cash Interest revenue Interest receivable Notes receivable 14,560,000 *Correct! 420.000 140.000 14,000,000 14,000,000 - Correct! Issuance of Note (October 1, 2021) Cash 13.440.000 Discount on notes payable 560,000 Notes payable Adjusting Entry (December 31, 2021) Interest expense 420.000 Discount on notes payable Maturity (January 31, 2022) Interest expense 140,000 Discount on notes payable 420.000 *- Correct! 140,000 - Correct! 14,000,000 Notes payable Cash 14,000,000 *- Correct! Effective interest rate: Discount Cash proceeds Interest rate for 4 months Annual effective rate